In 1994, RTD reported to the Colorado state legislature and the State Auditor that competitive
tendering
costs had risen nearly to internal RTD cost levels. In 1995-6, The Mundle/Cox Management
Administration Study (1) found that this cost comparison
had been invalid, in that the capital costs of competitive tendering
were included, but the same costs were not included with respect to internal operations.
Moreover, competitive
capital costs were artificially high due to RTD's requirement that new buses be purchased. In that
RTD is able to
and has leased its own vehicles to private providers for use in RTD competitively tendered
services, Mundle and
Cox concluded that the vehicle capital costs were a policy cost rather than a cost of competitive
tendering.

RTD was able to improve its cash flow position by requiring the private providers to purchase
new buses, which
could be purchased later by RTD under the terms of the contracts. At the time, most RTD capital
reserves
were used to construct a light rail line. Nonetheless, it was a costly method for purchasing
vehicles. Mundle
and Cox estimated RTD's ultimate cost at $52 milion, compared to a cash purchase price of $35
million.
As a result, RTD exercised the purchase option in 1996, to minimize the excessive capital costs.
The Mundle/Cox report, using the methodology developed for RTD by KPMG Peat Marwick,
estimated savings from competitive tendering at 31 to 35 percent from
1989 through 1994.